Tuesday, October 30, 2012

Why do ordinary Republicans vote against their own interests?

September 2, 2012
When Capitalists Cared
By HEDRICK SMITH
New York Times

IN the rancorous debate over how to get the sluggish economy moving, we have forgotten the wisdom of Henry Ford...In 1914, not long after the Ford Motor Company came out with the Model T, Ford made the startling announcement that he would pay his workers the unheard-of wage of $5 a day.

Not only was it a matter of social justice, Ford wrote, but paying high wages was also smart business. When wages are low, uncertainty dogs the marketplace and growth is weak. But when pay is high and steady, Ford asserted, business is more secure because workers earn enough to become good customers. They can afford to buy Model Ts.

This is not to suggest that Ford single-handedly created the American middle class. But he was one of the first business leaders to articulate what economists call “the virtuous circle of growth”: well-paid workers generating consumer demand that in turn promotes business expansion and hiring. Other executives bought his logic, and just as important, strong unions fought for rising pay and good benefits in contracts like the 1950 “Treaty of Detroit” between General Motors and the United Auto Workers.

Riding the dynamics of the virtuous circle, America enjoyed its best period of sustained growth in the decades after World War II, from 1945 to 1973, even though income tax rates were far higher than today. It created not only unprecedented middle-class prosperity but also far greater economic equality than today.

The chief executives of the long postwar boom believed that business success and workers’ well-being ran in tandem.

Frank W. Abrams, chairman of Standard Oil of New Jersey, voiced the corporate mantra of “stakeholder capitalism”: the need to balance the interests of all the stakeholders in the corporate family. “The job of management,” he wrote, “is to maintain an equitable and working balance among the claims of the various directly affected interest groups,” which he defined as “stockholders, employees, customers and the public at large.”

Earl S. Willis, a manager of employee benefits at General Electric, declared that “the employee who can plan his economic future with reasonable certainty is an employer’s most productive asset.”

From 1948 to 1973, the productivity of all nonfarm workers nearly doubled, as did average hourly compensation. But things changed dramatically starting in the late 1970s. Although productivity increased by 80.1 percent from 1973 to 2011, average wages rose only 4.2 percent and hourly compensation (wages plus benefits) rose only 10 percent over that time, according to government data analyzed by the Economic Policy Institute.

At the same time, corporate profits were booming. In 2006, the year before the Great Recession began, corporate profits garnered the largest share of national income since 1942, while the share going to wages and salaries sank to the lowest level since 1929. In the recession’s aftermath, corporate profits have bounced back while middle-class incomes have stagnated.

Today the prevailing cut-to-the-bone business ethos means that a company like Caterpillar demands a wage freeze and lower health benefits from its workers, while posting record profits.

Globalization, including the rise of Asia, and technological innovation can’t explain all or even most of today’s gaping inequality; if they did, we would see in other advanced economies the same hyperconcentration of wealth and the same stagnation of middle-class wages as in the United States. But we don’t.

In Germany, still a manufacturing and export powerhouse, average hourly pay has risen five times faster since 1985 than in the United States. The secret of Germany’s success, says Klaus Kleinfeld, who ran the German electrical giant Siemens before taking over the American aluminum company Alcoa in 2008, is “the social contract: the willingness of business, labor and political leaders to put aside some of their differences and make agreements in the national interest.”

In short, German leaders have practiced stakeholder capitalism and followed the century-old wisdom of Henry Ford, while American business and political leaders have dismantled the dynamics of the “virtuous circle” in pursuit of downsizing, offshoring and short-term profit and big dividends for their investors.

Today, we are all paying the price for this shift. As Ford recognized, if average Americans do not have secure jobs with steady and rising pay, the economy will be sluggish. Since the early 1990s, we have been mired three times in “jobless recoveries.” It’s time for America’s business elites to step beyond political rhetoric about protecting wealthy “job creators” and grasp Ford’s insight: Give the middle class a better share of the nation’s economic gains, and the economy will grow faster. Our history shows that.

Hedrick Smith, a former correspondent and Washington bureau chief of The New York Times, is the author of “Who Stole the American Dream?”

3 comments:

Anonymous
said...

Romney is a slippery chameleon who will say anything to be elected. His real positions on most issues are unknown as he bobs to the right and then the left to conform to the values of the crowd to whom he is addressing.

Romney is a unashamed and barefaced liar with unscrupulous intentions for the majority of Americans. His agenda is to transfer what little wealth that remains in the middle class to the rich. His disdain for the 47% un-rich is tangible. Clearly, this is class warfare. Nothing he says adds up. He is simply piling lie upon lie.

Open your eyes to the danger. This is the most important presidential election in the last 100 years. Romney will turn America into a heartless oligarchy run by the likes of Carl Rove and the Koch brothers. And, with several potential Supreme Court vacancies, America could radically veer to the right with damaging consequences for decades. Women will become second-class persons and minorities will suffer massive setbacks.

One must also review criticisms leveled at the Mormon church to understand Romney. Do we really know who the secretive Romney is? How can we vote for a man who will become the world’s most powerful leader who we do not really know?

Millions of Americans are angry at and damaged from the recession caused by George Bush and Dick Cheney. But, the Romney cure is worse than the disease. We must not throw Obama out with the Bush bath water. We must mobilize voters and remove Romney and the right wing of the Republican Party from the political scene once and for all.

Romney has become the ad hoc programmable robot of the white, rich, powerful, and callous. He has no soul. He is radical, extreme, and dangerous. Wake up America before it is too late.

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Quotes hall of fame - worth another look:

Jonathon Dunlop of Australia about the Miami Airport:"This is the most disorganized shambles of an airport that exists on this earth.''April 01, 2007 Eye on Miami Comment on Post__________________________________On "Colony Collapse Disorder":Anonymous said...I say lets wait till the last tree is going to be cut down, the last bit of oil used, the last lowland coastal areas flooded before we make any rash decisions that might effect the economy.April 21, 2007 Eye on Miami Comment_________________________________On Bee “Colony Collapse Disorder” being blamed on cell phones:Anonymous said...Hmmm. What are bees doing with cell phones, anyhow?April 20, 2007 Eye on Miami Comment_________________________________On South Florida Water Supply:Ron Littlepage said...Unfortunately, we know who would win when it comes to allowing development to run amok and it's not the wildlife.April 20, 2007 Eye on Miami Comment Post_________________________________Lesley Blackner said:In Florida, the sad reality is that government exists to serve the development machine, not the citizenry. That's why it's proper to say that in Florida we have government of the developer, by the developer and for the developer.April 22, 2007 Eye on Miami Post_________________________________On City of Miami and Miami Dade County giving $1,000,000 each to Jorge Perez’s Related Group (The Group's 2005 revenues were $3.25 billion.):"It makes as much sense as me donating half my paycheck to Warren Buffett.”May 6, 2007 Miami Herald Columnist Ana Menendez_________________________________On the FCAT Test:"'Florida is a serial mis-user of test scores.''Bob Schaeffer, director for Massachusetts-based FairTest.May 25, 2007 Miami Herald_________________________________Clifford Schulman (Greenberg Traurig Lobbyist):"This is the first time in 33 years that any one has accused me of fraud." June 28, 2007 Miami HeraldI say: hmm.__________________________________Max Rameau, Homeless Activist:"I respect Ron Book for his work with the Homeless Trust, but the Liberty City community and others have given broad support to this idea. I don't know that a big-time millionaire lobbyist can tell us what is best for Liberty City and the black community.'' July 28, 2007 Miami Herald__________________________________"After years of mismanagement under a board of political appointees and neighborhood activists, Miami-Dade County administrators have proposed a new way to run the troubled empowerment zone program. The plan: Bring in new political appointees and neighborhood activists."November 6, 2007 Miami Herald: Reporter Scott Hiaasen______________________________________"Saying "Greater Everglades" and "Northern Everglades" is not saying Everglades -- other places are deserving of being protected too, but there is only one Everglades. The main thing is to keep the 'Main Thing' the main thing -- which, lately, has not been the main thing." Bob Mooney - on Listserve "Everglades Commons"________________________________________"Does anyone in their right mind believe that Florida could conduct postal balloting without a major screw-up or scandal? Heavens, no! The whole country is keenly aware that our state is a sump hole of incompetence and corruption."Carl Hiaasen - March 16, 2008 Miami Herald_______________________________________On the Charter Review: "Commissioners want us to vote on their own pet changes, ideas the review team explicitly rejected. And, they're throwing their blatantly self-serving ballot questions at us at the same time. What a slap in the face to the charter review team — and to all of us!" Michael Lewis of Miami Today - April 10, 2008______________________________________On the Miami Dade County Commission:''Unfortunately, this is a commission that would build a cyanide factory next to a playground if you hired the right 12 lobbyists,'' Miami Lakes Councilman Michael Pizzi - May 14, 2008______________________________________"The days where we’re just building sprawl forever, those days are over. I think that Republicans, Democrats, everybody recognizes that that’s not a smart way to build communities." President Barack Obama in Fort Meyers - February 10, 2009______________________________________"So."Dick Cheney's response when told that two thirds of Americans did not support the war in Iraq. - Time Magazine 2008______________________________________"It seems like a bad idea can always find a home in the Florida Legislature." - Howard Simon - Executive Director of Florida ACLU - March 24, 2010

______________________________________Complete this sentence: South Florida really needs a..."Regional plan for controlled growth (before it becomes a concrete jungle similar to Houston), and a completely new set of elected officials that make decisions based on what's good for the future of South Florida instead of what's good for their wallets. - Jack McCabe, Real Estate expert who predicted the housing boom's end. - August 29, 2011 Miami Herald